Campbell Soup Co.’s purchase of Garden Fresh Gourmet pushed the value of deals among North American packaged-food companies this year to $66.3 billion, the most since at least 2009.
While the average deal volume in North American packaged foods has been $32 billion over the last five years, that amount was easily eclipsed when Brazilian private-equity firm 3G Capital Inc. and Warren Buffett’s Berkshire Hathaway Inc. announced plans to buy Kraft Foods Group Inc. and merge it with H.J. Heinz Co. The deal is valued at about $55.4 billion, according to Kenneth Shea, an analyst at Bloomberg Intelligence.
Campbell, which will buy Garden Fresh for $231 million, is the latest packaged-food company to use acquisitions to gain more up-to-date products and reinvigorate sales. Garden Fresh is the No. 1 refrigerated salsa brand, and also makes hummus and tortilla chips.
Hormel Foods Corp., the maker of Spam, said last month it’s acquiring natural-sausage maker Applegate Farms LLC for about $775 million. General Mills Inc. bought Annie’s Inc. last year for about $820 million, helping the Cheerios maker push into organic snacks and pastas.
More of such acquisitions may be coming.
There’s a long list of food companies with cheaper multiples than what Kraft sold for, Shea said. That includes companies like WhiteWave Foods Co. that have that have been mentioned as potential takeover targets.
WhiteWave’s brands includes Silk almond, soy and coconut milk and Earthbound Farm organic salad mixes. The company’s shares have surged 36 percent this year through Monday.
Another potential target is Boulder Brands Inc. That company makes Evol frozen, gluten-free tacos and burritos, which contain beef and poultry raised without antibiotics. It also sells Earth Balance vegan snacks. Those are the type of products that consumers want, and traditional-food companies have realized that, Shea said.
“Acquisitions have to be part of the conversation if they want to grow,” he said. “Sales are tough to come by, particularly in the center of the store and boxed goods.”